After a year of steady increases in freight prices, the U.S. trucking industry is experiencing a cooldown in demand, with linehaul rates declining significantly from their highs at the start of 2022. Trucking capacity has loosened considerably, thanks to new space entering the system, and a plateauing of consumer demand across major geographic markets.
The rise in trucking capacity also has to do with an improvement in efficiency across different nodes in the end-to-end supply chain, be it at ports, intermodal yards or warehouses. Transportation networks work in partnership, meaning that any tangible improvement in efficiency within one logistics segment has ripple effects on the efficiency of other segments.
As throughput across ports, intermodal yards and warehouses improved this year, the long truck queues outside their gates started dwindling, reducing idling times. This enabled drivers to keep their trucks moving for a longer duration within their allotted hours of service (HOS), directly increasing capacity availability without injecting fresh capacity into the system.
That said, the trucking industry is still far from solving some of its deepest challenges since the pandemic, such as the shortage of intermodal chassis in circulation. This bottleneck continues to tighten, threatening to set off a vicious cycle of delays throughout the logistics pipeline.
The industry isn’t suffering from an actual physical shortage of chassis. Instead, the current situation is a reflection of logjams that have persisted for a while, caused by a failure to optimize chassis usage. Chassis turnover days are a lynchpin metric that determines the health of the trucking economy, with higher numbers indicating a fall in efficiency.
TRAC Intermodal, the largest marine chassis provider in the U.S., reports a threefold increase in wait times for truckers to return chassis, compared with the pre-pandemic normal. This has an enormous impact on chassis availability. For fleets, increasing capital investment in procuring new chassis will also not be enough, considering the holdups in the system that will only continue to accumulate in the absence of serious optimization.
The headwinds to movement come from the railroad segment as well. The U.S. rail industry is seeing massive congestion across intermodal hubs such as Chicago and Joliet, with trains backed up for miles around their destinations. With the peak season approaching, shippers eager to front-load their inventories will cause an even greater surge in demand for capacity.
This would add more burden to an already precarious situation. One common reason for delays in chassis returns is the truckers themselves. Stuck in long queues outside intermodal hubs and warehouses, they prefer to “drop and hook” their chassis, reducing the hassle of waiting for the containers to be off-loaded.
But with warehouses swimming in excess containers and struggling with historically low space availability, containers sit longer atop chassis, rendering the chassis non-operational for that duration. As warehouses continued to reel under space and labor shortage, container-bound chassis keep piling outside their gates, drastically increasing chassis turnover times.
While fleets focus on leveraging drop-and-hook as a way to maximize their driver hours, it often comes at the expense of fleet utilization. With the industry being cyclical, the burden of delayed chassis inevitably comes back to hurt the fortunes of fleet businesses, as they scramble to find an empty chassis to haul the freight they signed up for.
Ultimately, the drop-and-hook practice will help carriers in the short term at best, and lead to extended pain if the freight market tightens. Technology can play a crucial role in alleviating the problem of chassis returns, and optimizing utilization. By adopting technology that brings visibility to the status and location of chassis, carriers can unearth idle assets that previously went unnoticed. Hardware sensors mounted on chassis enable the fleet’s back office to monitor asset conditions in real time, allowing it to keep count of chassis that are available for mounting with a container, and those that already have containers loaded onto them. Fleets can understand delays in chassis returns at a greater level of detail, ensuring available assets cover for delayed equipment, and plan operations better around problematic routes and shipment yards.
It's about time that fleets focused their attention on optimizing asset utilization alongside maximizing trucker driving hours to ensure a great bottom line. In a working environment with soaring interest rates on capital for equipment, and spiking fuel and labor costs, it’s prudent for fleets to aim at running their equipment as much as possible, even in times of tight capacity.
William Sandoval is senior vice president of product with PowerFleet.
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